The construction of a 400 kV transmission line project to connect the electricity generated from the West Seti and its tributaries to the national grid has become uncertain due to a lack of investment. The construction of the West Seti Corridor transmission line, which was supposed to begin in the current fiscal year, has become uncertain as the government has failed to secure the necessary funding.

The government had planned to construct the project using a concessional loan from the Government of India, with an estimated cost of $150.42 million (approximately NPR 20.90 billion). However, as Nepal proposed the project’s construction in July 2023 but did not receive a positive response from India, the project has become uncertain. On December 27, 2023, the Ministry of Finance sent a letter to the Ministry of Energy, Water Resources, and Irrigation, stating that no response had been received from the Indian government regarding the concessional loan.

The Ministry of Finance had proposed constructing the transmission line using the remaining $900 million from the concessional loan agreement (Line of Credit—LOC) under LOC-3 and LOC-4 with the Government of India. This proposal was forwarded to the Indian government through the Ministry of Foreign Affairs via the Indian Embassy, but no response has been received. In its letter, the Ministry of Finance mentioned that if an agreement is reached in the future, a proposal could be made for managing funds for the construction of the West Seti–Dododhara transmission line.

After receiving no response for a year, the Cabinet decided on October 29, 2024 to cancel the remaining $900 million loan under the concessional loan agreement (Line of Credit—LOC) 3 and 4. The uncertainty surrounding the transmission line construction project is expected to have a direct impact on the ongoing projects in the West Seti and its tributaries.

“We had submitted an application to the Indian government to start work this year. However, due to the lack of a positive response from their side, the project is likely to be delayed,” said Netra Gyawali, former Chief Executive Officer of the West Seti Transmission Line.

“A Power Purchase Agreement (PPA) for 500 megawatts has already been signed in that region, and construction has begun. If the transmission line is not completed before the power projects are finished, the state will face significant losses.”

He further stated that although the loan process was initiated with the condition that Indian companies and materials would be used for construction, the lack of approval has pushed the project into uncertainty.

Currently, four hydropower projects with a total capacity of 538 megawatts are under construction on the Seti River and its tributaries. These include Chainpur Seti (210 MW), Bajhang Upper Seti (216 MW), Seti River-3 (87 MW), and Sunigad (25 MW).

Additionally, four more projects with a combined capacity of 230 megawatts are awaiting construction approval. These include Sun Star (46 MW), Badimalika (60 MW), Nyadi (60 MW), and Malumela Seti (64 MW).

If the transmission line is not completed on time, eight hydropower projects with a total capacity of 768 megawatts in the region are expected to be affected. Since all these projects are under construction in Bajhang, delays in the transmission line will also impact local opportunities.

“If the transmission line is not built on time, the ongoing hydropower projects here will inevitably be delayed,” said Chandrajung Singh of Jayaprithvi Municipality-4. “The delay in such projects, which have the potential to boost economic activity in Sudurpaschim Province, could negatively impact employment, trade, and business.”

He suggested that the government should not rely solely on foreign donors but should explore alternative funding sources to proceed with the transmission line construction.

Hydropower experts warn that delays in the construction of the transmission line will impact both ongoing and planned projects.

“If the transmission line is not ensured, projects in the construction phase will face difficulties securing funding from banks, causing delays, while power produced by ongoing projects could go unused,” said Prajesh Bikram Thapa, Chief Executive Officer of Chilime Engineering under the Nepal Electricity Authority.

He added, “If the generated electricity cannot be sold, the overall project costs will increase.”

He stated that this would impact local benefits such as shares and bonuses, ultimately causing significant losses to the state.

Rajkiran Basukala, the project head of the 400 kV West Seti Transmission Line project under the National Transmission Grid Company Limited (RPGCL), which is responsible for the construction, stated that although they applied for the concessional loan under LOC-4 to complete the construction by the fiscal year 2030/2031, they have not received approval.

“We have received information that if not through LOC-4, the funding may come through LOC-5,” he said. “However, it is uncertain—there is no clarity on when it will be received.”

Basukala mentioned that the study for the 400 kV West Seti Transmission Line is in its final stages, and the engineering design has been completed. A total of 213 kilometers of transmission line needs to be constructed in the West Seti corridor: 60 kilometers from Bajhang to West Seti, 85 kilometers from West Seti to Dododhara, and 68 kilometers from West Seti to New Attariya.

Additionally, substations need to be constructed in Chainpur, Bajhang, and Bonlek, Doti. For the construction of the substations, 282 ropanis of land have already been acquired in Chainpur and 140 ropanis in Bonlek.

Basukala stated that the engineering design for the substations has also been completed.

Basukala mentioned that the initial environmental assessments for the West Seti–Dododhara and West Seti–New Attariya projects have been approved by the Ministry of Forests and Environment, while the approval process for the Bajhang to West Seti segment is ongoing. He stated that they are waiting for the permit from the Department of Electricity Development for the construction of the transmission line. He also noted that as soon as the funding is secured, they will proceed with the contracting process.

Source: Kantipur